Corporate and Other Laws (Group I) Model Test Paper - 2 (Answers) | Model Test Papers for CA Intermediate PDF Download

 Page 1


ANSWER OF MODEL TEST PAPER 2 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (c)
2. (b)
3. (c)
4. (b)
5. (a)
6. (d)
7. (c)
8. (c)
9. (b)
10. (b)
11. ( b)
12. (b)
13. ( c)
14. (b)
15. (c)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) (i) Section 1 of the Companies Act, 2013, provides that the provisions of
this Act shall apply to companies incorporated under this Act or under 
any previous company law. Hence, the provisions of the Companies Act, 
2013 are also applicable on Cross Limited. 
(ii) According to section 2(71) of the Companies Act, 2013, public company
means a company which is not a private company.
Provided that a company which is a subsidiary of a company, not being
a private company, shall be deemed to be public company for the
purposes of this Act even where such subsidiary company continues to
be a private company in its articles.
According to section 2(87) of the Companies Act, 2013, "subsidiary
company" or "subsidiary", in relation to any other company (that is to say
the holding company), means a company in which the holding company:
(1) controls the composition of the Board of Directors; or
(2) exercises or controls more than one-half of the total voting power
either at its own or together with one or more of its subsidiary
companies.
In the given question, total voting power in XYZ Private Limited is: 
411
Page 2


ANSWER OF MODEL TEST PAPER 2 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (c)
2. (b)
3. (c)
4. (b)
5. (a)
6. (d)
7. (c)
8. (c)
9. (b)
10. (b)
11. ( b)
12. (b)
13. ( c)
14. (b)
15. (c)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) (i) Section 1 of the Companies Act, 2013, provides that the provisions of
this Act shall apply to companies incorporated under this Act or under 
any previous company law. Hence, the provisions of the Companies Act, 
2013 are also applicable on Cross Limited. 
(ii) According to section 2(71) of the Companies Act, 2013, public company
means a company which is not a private company.
Provided that a company which is a subsidiary of a company, not being
a private company, shall be deemed to be public company for the
purposes of this Act even where such subsidiary company continues to
be a private company in its articles.
According to section 2(87) of the Companies Act, 2013, "subsidiary
company" or "subsidiary", in relation to any other company (that is to say
the holding company), means a company in which the holding company:
(1) controls the composition of the Board of Directors; or
(2) exercises or controls more than one-half of the total voting power
either at its own or together with one or more of its subsidiary
companies.
In the given question, total voting power in XYZ Private Limited is: 
411
Particulars Amount in ` 
Convertible Preference Shares (carrying voting 
rights) 
1,00,00,000 
Equity Shares 1,00,00,000 
Total Voting Power 2,00,00,000 
Cross Limited holds more than one- half of the total voting power 
[(` 10,00,000 equity shares+ ` 1,00,00,000 preference shares)/ 
` 2,00,00,000]. Therefore, XYZ Private Limited is a subsidiary of Cross 
Limited. 
Further, in terms of the provisions of section 2(71), XYZ Private Limited 
being subsidiary of Cross Limited (a public company), shall also be 
deemed to be a public company. 
(b) According to section 135(1) of the Companies Act, 2013, every company
net worth of rupees five hundred crore or more, or turnover of rupees
one thousand crore or more or a net profit of rupees five crore or more
during the immediately preceding financial year shall constitute a
Corporate Social Responsibility Committee of the Board.
Further, according to section 135(5), the Board of every company
referred to in sub-section (1), shall ensure that the company spends, in
every financial year, at least two per cent. of the average net profits of
the company made during the three immediately preceding financial
years or where the company has not completed the period of three
financial years since its incorporation, during such immediately
preceding financial years, in pursuance of its Corporate Social
Responsibility Policy.
Also, according to sub-section 9, where the amount to be spent by a
company under sub-section 5 does not exceed fifty lakh rupees, the
requirement for constitution of the Corporate Social Responsibility
Committee shall not be applicable and the functions of such Committee
provided under this section shall, in such cases, be discharged by the
Board of Directors of such company.
Here, the “Net Profit” shall not include such sums as may be prescribed,
and shall be calculated in accordance with the provisions of section 198.
In the instant case,
1. Net Profit before tax of HelpIndia Limited for the FY 2023- 24 is
` 10 crore, hence, HelpIndia Limited is required to constitute a CSR
committee during FY 2024- 25 as the Net profit before tax for the
FY exceeds ` 5 crore.
2. Minimum contribution towards CSR will be: 2% of average net
profits since incorporation (HelpIndia Limited was incorporated on
1
st
 April 2022.)
Average Net Profit since incorporation: (` 11 crore + ` 10 crore)/ 2 
= ` 10.5 crore 
412
Page 3


ANSWER OF MODEL TEST PAPER 2 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (c)
2. (b)
3. (c)
4. (b)
5. (a)
6. (d)
7. (c)
8. (c)
9. (b)
10. (b)
11. ( b)
12. (b)
13. ( c)
14. (b)
15. (c)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) (i) Section 1 of the Companies Act, 2013, provides that the provisions of
this Act shall apply to companies incorporated under this Act or under 
any previous company law. Hence, the provisions of the Companies Act, 
2013 are also applicable on Cross Limited. 
(ii) According to section 2(71) of the Companies Act, 2013, public company
means a company which is not a private company.
Provided that a company which is a subsidiary of a company, not being
a private company, shall be deemed to be public company for the
purposes of this Act even where such subsidiary company continues to
be a private company in its articles.
According to section 2(87) of the Companies Act, 2013, "subsidiary
company" or "subsidiary", in relation to any other company (that is to say
the holding company), means a company in which the holding company:
(1) controls the composition of the Board of Directors; or
(2) exercises or controls more than one-half of the total voting power
either at its own or together with one or more of its subsidiary
companies.
In the given question, total voting power in XYZ Private Limited is: 
411
Particulars Amount in ` 
Convertible Preference Shares (carrying voting 
rights) 
1,00,00,000 
Equity Shares 1,00,00,000 
Total Voting Power 2,00,00,000 
Cross Limited holds more than one- half of the total voting power 
[(` 10,00,000 equity shares+ ` 1,00,00,000 preference shares)/ 
` 2,00,00,000]. Therefore, XYZ Private Limited is a subsidiary of Cross 
Limited. 
Further, in terms of the provisions of section 2(71), XYZ Private Limited 
being subsidiary of Cross Limited (a public company), shall also be 
deemed to be a public company. 
(b) According to section 135(1) of the Companies Act, 2013, every company
net worth of rupees five hundred crore or more, or turnover of rupees
one thousand crore or more or a net profit of rupees five crore or more
during the immediately preceding financial year shall constitute a
Corporate Social Responsibility Committee of the Board.
Further, according to section 135(5), the Board of every company
referred to in sub-section (1), shall ensure that the company spends, in
every financial year, at least two per cent. of the average net profits of
the company made during the three immediately preceding financial
years or where the company has not completed the period of three
financial years since its incorporation, during such immediately
preceding financial years, in pursuance of its Corporate Social
Responsibility Policy.
Also, according to sub-section 9, where the amount to be spent by a
company under sub-section 5 does not exceed fifty lakh rupees, the
requirement for constitution of the Corporate Social Responsibility
Committee shall not be applicable and the functions of such Committee
provided under this section shall, in such cases, be discharged by the
Board of Directors of such company.
Here, the “Net Profit” shall not include such sums as may be prescribed,
and shall be calculated in accordance with the provisions of section 198.
In the instant case,
1. Net Profit before tax of HelpIndia Limited for the FY 2023- 24 is
` 10 crore, hence, HelpIndia Limited is required to constitute a CSR
committee during FY 2024- 25 as the Net profit before tax for the
FY exceeds ` 5 crore.
2. Minimum contribution towards CSR will be: 2% of average net
profits since incorporation (HelpIndia Limited was incorporated on
1
st
 April 2022.)
Average Net Profit since incorporation: (` 11 crore + ` 10 crore)/ 2 
= ` 10.5 crore 
412
Minimum contribution towards CSR will be: 2% of ` 10.5 crore = ` 0.21 
crore or ` 21 lakh. 
In the given question, since the amount to be spent by HelpIndia Limited 
is not exceeding ` 50 lakh, the requirement for constitution of the 
Corporate Social Responsibility Committee shall not be applicable and 
the functions of such Committee provided under this section shall, in 
such cases, be discharged by the Board of Directors of such company. 
(c) Section 5 of the Foreign Exchange Management Act, 1999 provides that
any person may sell or draw foreign exchange to or from an authorized
person if such sale or drawal is a current account transaction. The
Central Government in consultation can, in public interest and in
consultation with Reserve Bank of India, impose reasonable restrictions
for such transactions.
Schedule II of the Foreign Exchange Management (Current Account
Transactions) Rules, 2000 provides that no person shall draw foreign
exchange for a transaction without approval of the Central Government.
One of the transaction included in Schedule II is remittance of prize
money/ sponsorship of sports activity abroad by a person other than
International/ National/ State level sports bodies, if the amount involved
exceeds USD 100,000.
Accordingly, Rohan Sharma Cricket Academy can withdraw foreign
exchange of USD 100,000 as participation fee after obtaining permission
from Ministry of Human Resource Development (Department of Youth
Affairs and Sports) as prescribed in Schedule II of Foreign Exchange
Management (Current Account Transactions) Rules, 2000.
2. (a) (i) Abridged Form of Annual Return 
In terms of Second Proviso to Section 91(1) of the Companies Act, 
2013, the Central Government may prescribe abridged form of 
annual return for One Person Company, small company and such 
other class or classes of companies as may be prescribed.  
As per Rule 11 (1) One Person Company and small company shall 
file the annual return in Form No. MGT-7A. 
(ii) Signing of Annual Return
The annual return shall be signed by a director of the company and
the company secretary; and in case, there is no company secretary,
by a company secretary in practice.
In relation to One Person Company, small company and private
company (if such private company is a start-up), the annual return
shall be signed by the company secretary, or where there is no
company secretary, by the director of the company.
(b) According to section 63 of the Companies Act, 2013, a company may
issue fully paid-up bonus shares to its members, in any manner
whatsoever, out of:
(i) its free reserves;
413
Page 4


ANSWER OF MODEL TEST PAPER 2 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (c)
2. (b)
3. (c)
4. (b)
5. (a)
6. (d)
7. (c)
8. (c)
9. (b)
10. (b)
11. ( b)
12. (b)
13. ( c)
14. (b)
15. (c)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) (i) Section 1 of the Companies Act, 2013, provides that the provisions of
this Act shall apply to companies incorporated under this Act or under 
any previous company law. Hence, the provisions of the Companies Act, 
2013 are also applicable on Cross Limited. 
(ii) According to section 2(71) of the Companies Act, 2013, public company
means a company which is not a private company.
Provided that a company which is a subsidiary of a company, not being
a private company, shall be deemed to be public company for the
purposes of this Act even where such subsidiary company continues to
be a private company in its articles.
According to section 2(87) of the Companies Act, 2013, "subsidiary
company" or "subsidiary", in relation to any other company (that is to say
the holding company), means a company in which the holding company:
(1) controls the composition of the Board of Directors; or
(2) exercises or controls more than one-half of the total voting power
either at its own or together with one or more of its subsidiary
companies.
In the given question, total voting power in XYZ Private Limited is: 
411
Particulars Amount in ` 
Convertible Preference Shares (carrying voting 
rights) 
1,00,00,000 
Equity Shares 1,00,00,000 
Total Voting Power 2,00,00,000 
Cross Limited holds more than one- half of the total voting power 
[(` 10,00,000 equity shares+ ` 1,00,00,000 preference shares)/ 
` 2,00,00,000]. Therefore, XYZ Private Limited is a subsidiary of Cross 
Limited. 
Further, in terms of the provisions of section 2(71), XYZ Private Limited 
being subsidiary of Cross Limited (a public company), shall also be 
deemed to be a public company. 
(b) According to section 135(1) of the Companies Act, 2013, every company
net worth of rupees five hundred crore or more, or turnover of rupees
one thousand crore or more or a net profit of rupees five crore or more
during the immediately preceding financial year shall constitute a
Corporate Social Responsibility Committee of the Board.
Further, according to section 135(5), the Board of every company
referred to in sub-section (1), shall ensure that the company spends, in
every financial year, at least two per cent. of the average net profits of
the company made during the three immediately preceding financial
years or where the company has not completed the period of three
financial years since its incorporation, during such immediately
preceding financial years, in pursuance of its Corporate Social
Responsibility Policy.
Also, according to sub-section 9, where the amount to be spent by a
company under sub-section 5 does not exceed fifty lakh rupees, the
requirement for constitution of the Corporate Social Responsibility
Committee shall not be applicable and the functions of such Committee
provided under this section shall, in such cases, be discharged by the
Board of Directors of such company.
Here, the “Net Profit” shall not include such sums as may be prescribed,
and shall be calculated in accordance with the provisions of section 198.
In the instant case,
1. Net Profit before tax of HelpIndia Limited for the FY 2023- 24 is
` 10 crore, hence, HelpIndia Limited is required to constitute a CSR
committee during FY 2024- 25 as the Net profit before tax for the
FY exceeds ` 5 crore.
2. Minimum contribution towards CSR will be: 2% of average net
profits since incorporation (HelpIndia Limited was incorporated on
1
st
 April 2022.)
Average Net Profit since incorporation: (` 11 crore + ` 10 crore)/ 2 
= ` 10.5 crore 
412
Minimum contribution towards CSR will be: 2% of ` 10.5 crore = ` 0.21 
crore or ` 21 lakh. 
In the given question, since the amount to be spent by HelpIndia Limited 
is not exceeding ` 50 lakh, the requirement for constitution of the 
Corporate Social Responsibility Committee shall not be applicable and 
the functions of such Committee provided under this section shall, in 
such cases, be discharged by the Board of Directors of such company. 
(c) Section 5 of the Foreign Exchange Management Act, 1999 provides that
any person may sell or draw foreign exchange to or from an authorized
person if such sale or drawal is a current account transaction. The
Central Government in consultation can, in public interest and in
consultation with Reserve Bank of India, impose reasonable restrictions
for such transactions.
Schedule II of the Foreign Exchange Management (Current Account
Transactions) Rules, 2000 provides that no person shall draw foreign
exchange for a transaction without approval of the Central Government.
One of the transaction included in Schedule II is remittance of prize
money/ sponsorship of sports activity abroad by a person other than
International/ National/ State level sports bodies, if the amount involved
exceeds USD 100,000.
Accordingly, Rohan Sharma Cricket Academy can withdraw foreign
exchange of USD 100,000 as participation fee after obtaining permission
from Ministry of Human Resource Development (Department of Youth
Affairs and Sports) as prescribed in Schedule II of Foreign Exchange
Management (Current Account Transactions) Rules, 2000.
2. (a) (i) Abridged Form of Annual Return 
In terms of Second Proviso to Section 91(1) of the Companies Act, 
2013, the Central Government may prescribe abridged form of 
annual return for One Person Company, small company and such 
other class or classes of companies as may be prescribed.  
As per Rule 11 (1) One Person Company and small company shall 
file the annual return in Form No. MGT-7A. 
(ii) Signing of Annual Return
The annual return shall be signed by a director of the company and
the company secretary; and in case, there is no company secretary,
by a company secretary in practice.
In relation to One Person Company, small company and private
company (if such private company is a start-up), the annual return
shall be signed by the company secretary, or where there is no
company secretary, by the director of the company.
(b) According to section 63 of the Companies Act, 2013, a company may
issue fully paid-up bonus shares to its members, in any manner
whatsoever, out of:
(i) its free reserves;
413
(ii) the securities premium account; or
(iii) the capital redemption reserve account.
Provided that no issue of bonus shares shall be made by capitalising 
reserves created by the revaluation of assets. 
Conditions for issue of Bonus Shares: No company shall capitalise 
its profits or reserves for the purpose of issuing fully paid-up bonus 
shares, unless— 
(i) it is authorised by its Articles;
(ii) it has, on the recommendation of the Board, been authorised in the
general meeting of the company;
(iii) it has not defaulted in payment of interest or principal in respect of
fixed deposits or debt securities issued by it;
(iv) it has not defaulted in respect of payment of statutory dues of the
employees, such as, contribution to provident fund, gratuity and
bonus;
(v) the partly paid-up shares, if any, outstanding on the date of
allotment, are made fully paid-up;
(vi) it complies with conditions as are prescribed by Rule 14 of the
Companies (Share Capital and debentures) Rules, 2014 which
states that the company which has once announced the decision of
its Board recommending a bonus issue, shall not subsequently
withdraw the same.
Further, the company has to ensure that the bonus shares shall not be 
issued in lieu of dividend. 
For the issue of bonus shares APR Limited will require reserves of 
` 50,00,000 (i.e. half of ` 1,00,00,000 being the paid-up share capital), 
which is readily available with the company. Hence, after following the 
above conditions relating to the issue of bonus shares, the company may 
proceed for a bonus issue of 1 share for every 2 shares held by the 
existing shareholders.   
(c) (i) Movable Property 
According to section 3(36) of the General Clauses Act, 1897, 
‘Movable Property’ shall mean property of every description, except 
immovable property. 
Thus, any property which is not immovable property is movable 
property. Debts, share, electricity are moveable property. 
(ii) Oath
According to section 3(37) of the General Clauses Act, 1897, ‘Oath’
shall include affirmation and declaration in the case of persons by
law allowed to affirm or declare instead of swearing.
3. (a) As per section 8 of the Companies Act, 2013, the Central Government
(ROC in its behalf) may grant a licence (to operate as a non profit 
414
Page 5


ANSWER OF MODEL TEST PAPER 2 
INTERMEDIATE COURSE: GROUP – I  
PAPER – 2: CORPORATE AND OTHER LAWS 
ANSWER TO PART – I CASE SCENARIO BASED MCQS 
1. (c)
2. (b)
3. (c)
4. (b)
5. (a)
6. (d)
7. (c)
8. (c)
9. (b)
10. (b)
11. ( b)
12. (b)
13. ( c)
14. (b)
15. (c)
ANSWERS OF PART – II DESCRIPTIVE QUESTIONS 
1. (a) (i) Section 1 of the Companies Act, 2013, provides that the provisions of
this Act shall apply to companies incorporated under this Act or under 
any previous company law. Hence, the provisions of the Companies Act, 
2013 are also applicable on Cross Limited. 
(ii) According to section 2(71) of the Companies Act, 2013, public company
means a company which is not a private company.
Provided that a company which is a subsidiary of a company, not being
a private company, shall be deemed to be public company for the
purposes of this Act even where such subsidiary company continues to
be a private company in its articles.
According to section 2(87) of the Companies Act, 2013, "subsidiary
company" or "subsidiary", in relation to any other company (that is to say
the holding company), means a company in which the holding company:
(1) controls the composition of the Board of Directors; or
(2) exercises or controls more than one-half of the total voting power
either at its own or together with one or more of its subsidiary
companies.
In the given question, total voting power in XYZ Private Limited is: 
411
Particulars Amount in ` 
Convertible Preference Shares (carrying voting 
rights) 
1,00,00,000 
Equity Shares 1,00,00,000 
Total Voting Power 2,00,00,000 
Cross Limited holds more than one- half of the total voting power 
[(` 10,00,000 equity shares+ ` 1,00,00,000 preference shares)/ 
` 2,00,00,000]. Therefore, XYZ Private Limited is a subsidiary of Cross 
Limited. 
Further, in terms of the provisions of section 2(71), XYZ Private Limited 
being subsidiary of Cross Limited (a public company), shall also be 
deemed to be a public company. 
(b) According to section 135(1) of the Companies Act, 2013, every company
net worth of rupees five hundred crore or more, or turnover of rupees
one thousand crore or more or a net profit of rupees five crore or more
during the immediately preceding financial year shall constitute a
Corporate Social Responsibility Committee of the Board.
Further, according to section 135(5), the Board of every company
referred to in sub-section (1), shall ensure that the company spends, in
every financial year, at least two per cent. of the average net profits of
the company made during the three immediately preceding financial
years or where the company has not completed the period of three
financial years since its incorporation, during such immediately
preceding financial years, in pursuance of its Corporate Social
Responsibility Policy.
Also, according to sub-section 9, where the amount to be spent by a
company under sub-section 5 does not exceed fifty lakh rupees, the
requirement for constitution of the Corporate Social Responsibility
Committee shall not be applicable and the functions of such Committee
provided under this section shall, in such cases, be discharged by the
Board of Directors of such company.
Here, the “Net Profit” shall not include such sums as may be prescribed,
and shall be calculated in accordance with the provisions of section 198.
In the instant case,
1. Net Profit before tax of HelpIndia Limited for the FY 2023- 24 is
` 10 crore, hence, HelpIndia Limited is required to constitute a CSR
committee during FY 2024- 25 as the Net profit before tax for the
FY exceeds ` 5 crore.
2. Minimum contribution towards CSR will be: 2% of average net
profits since incorporation (HelpIndia Limited was incorporated on
1
st
 April 2022.)
Average Net Profit since incorporation: (` 11 crore + ` 10 crore)/ 2 
= ` 10.5 crore 
412
Minimum contribution towards CSR will be: 2% of ` 10.5 crore = ` 0.21 
crore or ` 21 lakh. 
In the given question, since the amount to be spent by HelpIndia Limited 
is not exceeding ` 50 lakh, the requirement for constitution of the 
Corporate Social Responsibility Committee shall not be applicable and 
the functions of such Committee provided under this section shall, in 
such cases, be discharged by the Board of Directors of such company. 
(c) Section 5 of the Foreign Exchange Management Act, 1999 provides that
any person may sell or draw foreign exchange to or from an authorized
person if such sale or drawal is a current account transaction. The
Central Government in consultation can, in public interest and in
consultation with Reserve Bank of India, impose reasonable restrictions
for such transactions.
Schedule II of the Foreign Exchange Management (Current Account
Transactions) Rules, 2000 provides that no person shall draw foreign
exchange for a transaction without approval of the Central Government.
One of the transaction included in Schedule II is remittance of prize
money/ sponsorship of sports activity abroad by a person other than
International/ National/ State level sports bodies, if the amount involved
exceeds USD 100,000.
Accordingly, Rohan Sharma Cricket Academy can withdraw foreign
exchange of USD 100,000 as participation fee after obtaining permission
from Ministry of Human Resource Development (Department of Youth
Affairs and Sports) as prescribed in Schedule II of Foreign Exchange
Management (Current Account Transactions) Rules, 2000.
2. (a) (i) Abridged Form of Annual Return 
In terms of Second Proviso to Section 91(1) of the Companies Act, 
2013, the Central Government may prescribe abridged form of 
annual return for One Person Company, small company and such 
other class or classes of companies as may be prescribed.  
As per Rule 11 (1) One Person Company and small company shall 
file the annual return in Form No. MGT-7A. 
(ii) Signing of Annual Return
The annual return shall be signed by a director of the company and
the company secretary; and in case, there is no company secretary,
by a company secretary in practice.
In relation to One Person Company, small company and private
company (if such private company is a start-up), the annual return
shall be signed by the company secretary, or where there is no
company secretary, by the director of the company.
(b) According to section 63 of the Companies Act, 2013, a company may
issue fully paid-up bonus shares to its members, in any manner
whatsoever, out of:
(i) its free reserves;
413
(ii) the securities premium account; or
(iii) the capital redemption reserve account.
Provided that no issue of bonus shares shall be made by capitalising 
reserves created by the revaluation of assets. 
Conditions for issue of Bonus Shares: No company shall capitalise 
its profits or reserves for the purpose of issuing fully paid-up bonus 
shares, unless— 
(i) it is authorised by its Articles;
(ii) it has, on the recommendation of the Board, been authorised in the
general meeting of the company;
(iii) it has not defaulted in payment of interest or principal in respect of
fixed deposits or debt securities issued by it;
(iv) it has not defaulted in respect of payment of statutory dues of the
employees, such as, contribution to provident fund, gratuity and
bonus;
(v) the partly paid-up shares, if any, outstanding on the date of
allotment, are made fully paid-up;
(vi) it complies with conditions as are prescribed by Rule 14 of the
Companies (Share Capital and debentures) Rules, 2014 which
states that the company which has once announced the decision of
its Board recommending a bonus issue, shall not subsequently
withdraw the same.
Further, the company has to ensure that the bonus shares shall not be 
issued in lieu of dividend. 
For the issue of bonus shares APR Limited will require reserves of 
` 50,00,000 (i.e. half of ` 1,00,00,000 being the paid-up share capital), 
which is readily available with the company. Hence, after following the 
above conditions relating to the issue of bonus shares, the company may 
proceed for a bonus issue of 1 share for every 2 shares held by the 
existing shareholders.   
(c) (i) Movable Property 
According to section 3(36) of the General Clauses Act, 1897, 
‘Movable Property’ shall mean property of every description, except 
immovable property. 
Thus, any property which is not immovable property is movable 
property. Debts, share, electricity are moveable property. 
(ii) Oath
According to section 3(37) of the General Clauses Act, 1897, ‘Oath’
shall include affirmation and declaration in the case of persons by
law allowed to affirm or declare instead of swearing.
3. (a) As per section 8 of the Companies Act, 2013, the Central Government
(ROC in its behalf) may grant a licence (to operate as a non profit 
414
organisation) if it is proved to the satisfaction that a person or an 
association of persons proposed to be registered under the Companies 
Act, 2013, as a limited company: 
- has in its objects the promotion of commerce, art, science, sports,
education, research, social welfare, religion, charity, protection of
environment or any such other object;
- intends to apply its profits (if any) or other income in promoting its
objects; and
- intends to prohibit payment of any dividend to its members.
(b) According to Rule 2(1)(c)(x) of the Companies (Acceptance of Deposits)
Rules, 2014, any amount received from an employee of the company not
exceeding his annual salary under a contract of employment with the
company in the nature of non-interest bearing security deposit, is not
considered as deposit .
In the above case, the amount of ` 4,00,000 received by Wood Limited
from Mr. Cotton under the contract of employment with the company
being non-interest bearing security deposit, will be considered as deposit in
terms of sub-clause (x), since the amount is more than his annual
salary of ` 3,85,000.
(c) Read the Statute as a Whole:
It is the elementary principle that construction of a statute is to be made
of all its parts taken together and not of one part only. The deed must be
read as a whole in order to ascertain the true meaning of its several
clauses, and the words of each clause should be so interpreted as to
bring them into harmony with other provisions– if that interpretation does
no violence to the meaning of which they are naturally susceptible. And
the same approach would apply with equal force with regard to Acts and
Rules passed by the legislature.
One of the safest guides to the construction of sweeping general words is
to examine other words of like import in the same enactment or
instrument to see what limitations must be imposed on them. If we find
that a number of such expressions have to be subjected to limitations
and qualifications and that such limitations and qualifications are of the
same nature, that circumstance forms a strong argument for subjecting
the expression in dispute to a similar limitation and qualification.
4. (a) Periodical Financial Results [Section 129A of the Companies Act,
2013] 
The Central Government may, require such class or classes of unlisted 
companies, as may be prescribed: 
(a) to prepare the financial results of the company on periodical basis
and in prescribed form
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